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Dormant Interstate 10 Questar pipeline may be revived

Barrett Newkirk and Robert Hopwood
4:02 p.m. PDT July 13, 2014

Questar may need to extend the pipeline farther east, putting it closer to communities of the Coachella Valley.

A 57-year-old pipeline lying dormant underground along the Interstate 10 corridor could again deliver oil to the California coast, if its corporate owner gains the approval of regulators.
(Photo:
Omar Ornelas/The Desert Sun
)

Story Highlights

The 16-inch steel pipe runs 96 miles from Long Beach to a point between Cabazon and Whitewater.

A 57-year-old pipeline lying dormant underground along the Interstate 10 corridor could again deliver oil to the California coast, if its corporate owner gains the approval of regulators.

In addition to restarting the line that's been unused for 16 years, Salt Lake City-based Questar Corp. is eyeing locations in the region to build a new rail terminal that would transfer oil from train to pipe.

The project is in the early development stages, but Questar is considering several sites from Beaumont to Indio for the rail terminal, said Lori Creer, director of business development for Questar's pipeline subsidiary.

Creer declined to name specific sites, but confirmed a location in North Palm Springs was on the list.

"We haven't really nailed anything down," she said.

The 16-inch steel pipe runs 96 miles from Long Beach to a point between Cabazon and Whitewater. It's capable of carrying up to 120,000 barrels of oil a day but has been unused since Questar purchased it in 1998. A single barrel of crude can produce about 19 gallons of gasoline along with other petroleum-based products like jet fuel.

If reactivated, the line would better link refineries in Long Beach to the growing supply of crude oil from the central United States and Canada in a way considered safer than railroad.

Questar and state regulators said the pipeline will undergo thorough inspections to ensure it poses no risks of leaks. But Jeff Morgan, who leads the local chapter of the Sierra Club, said he and fellow environmentalists will be watching the approval process to guarantee modern guidelines are met.

"The way you built a pipeline 50 years ago is not how you build a pipeline now," Morgan said. "The older they are, the more likely they are to fail you."

Depending on the location chosen for the rail terminal, Questar may need to extend the pipeline farther east, putting it closer to communities of the Coachella Valley and environmentally sensitive areas.

A major spill in those areas, Morgan said, would be devastating to already threatened species like the desert tortoise, fringe-toed lizards and a flowering plant called the Coachella Valley milk vetch.

There's also the fear of spilled oil reaching the valley's supply of fresh water in the underground aquifer in the north Palm Springs area that holds water delivered by the Colorado River Aqueduct.

"Presumably they would have a lot a lot of trains, and each train can have over 100 tankers, even 200. And think how much oil is in one of them," Morgan said.

"A spill would put all sorts of things at risk."

Local meetings

A decision on the location of the rail terminal could come in the next couple of months, with oil being shipped through the pipeline by the end of 2016, assuming approval from local governments and the state comes on schedule, Creer said.

The exact regulatory checkoffs would depend on the terminal site and any needed pipeline extension, but Creer said a study of the environmental impacts as required by the California Environmental Quality Act would be done.

Other requirements could come if the pipeline is extended into federal or tribal lands, but Creer stressed it was too early to know for certain since the site of the rail terminal isn't known.

A rail terminal typically involves a fenced-in property with multiple tracks to allow for the sorting of oil shipments and tanker fields for storage, said Rick Kuprewicz, a pipeline safety consultant who previously worked for the ARCO subsidiary that oversaw the pipeline before it was sold to Questar.

"If you're looking at a new tank farm going into your neighborhood, you don't want it near homes," he said. "Distance is the ultimate fail-safe, but these facilities, they're not dangerous."

Questar didn't provide an estimate for how many people would staff the terminal, but Kuprewicz said they are typically low-manpower operations of less than a dozen people.

"You're going to see stuff like tanks and pumps, and not a lot of people," he said.

Questar representatives have been meeting with local governments to discuss the project, which Questar is calling the Inland California Express and is being planned under an agreement with Spectra Energy Corp. in Houston.

Creer said it's too early to begin seeking local approval of the project.

"We haven't filed any applications with the state or done anything like that," she said. "We would have to get all the conditional use permits, all the air permits, whether we extend the pipeline or not."

Questar met with Palm Springs city officials on March 13 to discuss a potential site on the city's north side, city Planning Director Margo Wheeler said.

Wheeler said she couldn't remember the exact property Questar was considering or its size, but she said it was in an area by railroad tracks and the northside wash.

If Questar did pick North Palm Springs for the rail terminal, Wheeler said the city would need to consider a revision to its general plan and a zoning change from a business park zone to manufacturing.

Any plans to process oil on the site would raise other environment issues that would need to be addressed, Wheeler said.

Creer, however, said no processing — only mixing and storing oil — would take place at the rail terminal.

Mixing involves combining types of oil into a new blend, often to create a supply that fills orders from refineries, Kuprewicz said. Processing is more involved and can include treating, distilling or drying crude oil in ways that can cause more emissions and lead to stiffer zoning rules, he said.

Questar has not been in touch with Palm Springs since the March meeting, Wheeler said.

Staff from Cathedral City also met with the company several months ago, but there's been no follow-up from the company, said Lisa Lukes, the city's business development manager.

"It was very conceptual," Lukes said.

A similar meeting took place in April at the Riverside office of county Supervisor John Benoit.

Michelle DeArmond, Benoit's chief-of-staff, said she and the supervisor sat down with people from Questar, who at the time expressed interest in a North Palm Springs site.

Benoit's office had not heard from Questar since April, and DeArmond said the county has received no applications for a Questar project.

"I think they were briefing us mainly as a courtesy to governments in the area," she said.

Maintenance and inspections

The inactive pipe is the western segment of a line extending from the coast into New Mexico that Questar purchased from ARCO with plans to convert it for transporting natural gas.

The easternmost 485 miles was converted, but Steve Chapman, communications coordinator for special projects with Questar, said the company couldn't develop a working plan to pass regulatory hurdles to change the western segment. Questar eventually sold a middle segment running roughly from Whitewater to Essex in San Bernardino County to SoCal Gas.

"When we purchased (the pipeline), we totally refurbished it with the idea of converting it to natural gas, and what we call the eastern segment has been doing that safely since we started the process," Chapman said.

ARCO also cleaned the pipeline during the 1990s, Creer noted in an email.

"Our pipeline consultant will study the pipeline and determine if and where integrity work is required," she wrote. "We have maintained the pipeline with cathodic protection (an anti-corrosion safeguard) and it has been packed with nitrogen to maintain structural integrity while it has been idle."

Those are standard precautions companies take to maintain an unused line, Kuprewicz said.

Even though Questar deals exclusively with natural gas lines, Kuprewicz said the company should be able to easily pick up on the separate set of regulations dealing with oil.

Kuprewicz noted the carbon steel used for the pipe is durable and that the age of a line isn't necessarily a factor if it's well-maintained.

Over 40 years of working with pipelines, Kuprewicz said he's never seen an accident that wasn't preventable. They always come down to a series of failures at the company, he said.

"This shouldn't be a problem, but the real driver here is economics," he said. "Don't cut corners to save a few dollars and bet the company."

Oil lines throughout California date from around the 1940s to the present, said Bob Gorham, chief of the pipeline safety division for the state Fire Marshal, which inspects pipelines within California.

"Most of the time as lines get older, they get taken out of service or the purpose of the line is changed," he said. "It depends on how well the line is taken care of."

Before the Questar line is restarted, it would need to pass a Fire Marshal inspection. Full re-inspections are done every three years with other specialized inspections possibly happening more often, Gorham said. An independent testing firm approved by the state witnesses those tests and reports its findings to the state Fire Marshal.

In addition, the company must have specialized firms test the pipelines every five years or less, he said. Those inspections either involve pressure tests to check for leaks by running equipment through the pipe doing internal checks for corrosion.

The state has never had to shut down a pipeline, Gorham said, since companies move to shut off their lines when problems arise.

So far this year, he said there have been 17 leaks, mostly small incidents contained to a company's own site and no major spills that got into public spaces.

"Overall for the past 20, years the leaks on pipelines have dropped dramatically," he said.

"We've got 5,500 miles in the state operating currently, and it's a safer mode of transportation than rail and highway. Before they can operate, it will be thoroughly inspected and tested and brought up to current standards."

Risks and rewards

Major accidents involving faulty pipelines, while rare, do happen. On Sept. 9, 2010, a natural gas line in San Bruno, Calif., owned by Pacific Gas and Electric Co. exploded, killing eight people. Two weeks earlier, an oil line run by Enbridge Energy spilled an estimated 843,000 gallons of oil in southern Michigan.

And with the recent growth in oil extraction from the Bakken crude oil fields in North Dakota has come an increase in fires involving train accidents. The derailment and explosion of a 74-car train carrying Bakken crude through Quebec on July 6, 2013, killed 47 people.

The federal Pipeline and Hazardous Material Safety Administration in January issued a safety alert saying that oil coming from the Bakken region "may be more flammable than traditional heavy crude oil."

The risks posed by trains carrying crude oil have gotten the attention of state lawmakers. A bill by Senate Democrat Fran Pavley of Agoura Hills would require risk assessments of crude-by-rail operators, provider training and equipment for first responders and increase disclosures of crude oil traveling near homes.

The bill, which passed the full state Senate and two House committees, has support from environmental groups. The California Chamber of Commerce and the California Independent Petroleum Association are among the business groups opposing it.

Creer with Questar said the source of the oil coming to Southern California via rail and going into the pipeline will be dictated by orders coming from refineries.

Refineries in the Los Angeles area contribute to the roughly 2 million barrels of petroleum processed in California each day, with about half going toward gasoline production, according to the California Energy Commission.

By reopening its unused Southern California pipeline, Creer said Questar would be able to deliver domestic crude oil that is potentially cheaper than the foreign oil arriving in Long Beach by cargo ship. The pipeline would also help reduce rail congestion in the Los Angeles area, she said.

"It transported oil from the '50s to the '90s, and it transported it in two directions," she said. "This is not a new service for this pipeline."

In 2013, nearly 6.3 million barrels of crude oil entered California via rail, representing about 1 percent of the oil processed by California refineries that year, according to the Energy Commission. More than half of that oil came from Canada and nearly a quarter came from North Dakota.

Carl Kirst, a financial analyst who follows Questar for BMO Capital Markets, said the pipeline and rail terminal would allow Questar and its partner Spectra to refine a mix of oil similar to the declining supplies of oil that refineries in Southern California have received from the Alaska North Slope region.

Kirst described Questar as a company with a "conservative management team" that doesn't cut corners. He said the new pipeline would become a small piece of company's operations, and with the pipeline already in the ground much of the work is already done.

"I would say $300 million should basically do it," he said while estimating the two companies' combined investment.

"This project happening or not happening is not necessarily a make-or-break for the company as a whole," he said. "It's not going to become TransCanda's Keystone XL."

Plans to construct that pipeline through the central U.S. from Canada to the Gulf of Mexico have been fraught with delays and political debates weighing its economic benefits and environmental impact.

Kuprewicz, the safety consultant, said it should surprise no one that energy companies are trying to reuse the inactive pipeline since it gets around the costs and other challenges that come with installing a new distribution route.

"There's been a lot of opposition to just putting in pipelines across the country," he said. "They're probably looking at the economics of the line and salivating."

Reach Barrett Newkirk at (760) 778-4767 or at barrett.newkirk@desertsun.com.